Definitions for Malinvestment
ma·l·in·vest·ment

WiktionaryRate this definition:5.0 / 2 votes

1. malinvestmentnoun

   An incorrect or unwise investment

WikipediaRate this definition:0.0 / 0 votes

1. Malinvestment

   In Austrian business cycle theory, malinvestments are badly allocated business investments due to artificially low cost of credit and an unsustainable increase in money supply. Central banks are often blamed for causing malinvestments, such as the dot-com bubble and the United States housing bubble. Austrian economists such as the Swedish central bank's Nobel Memorial Prize in Economic Sciences laureate F. A. Hayek advocate the idea that malinvestment occurs due to the combination of fractional reserve banking and artificially low interest rates misleading relative price signals which eventually necessitate a corrective contraction – a boom followed by a bust.In the Austrian Business Cycle Theory and all its different frameworks, the actual definition of malinvestment is the same: an investment with high potential that becomes worthless. However, it is important to note that a malinvestment only occurs if the investment becomes worthless due to increased interest rates. The classification of a malinvestment is only when there is an increased amount of credit which causes it to become worthless. Many economists believe that malinvestments occur at different times and to certain companies. Åkerman and Dahmén who came up with the Åkerman-Dahmén theory, which is different than the Austrian Business Cycle Theory, believe that a malinvestment will occur during the "boom" to companies who cannot keep up with the interest rate growth.The concept dates back to at least 1867. In 1940, Ludwig von Mises wrote, "The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers' stone to make it last."

WikidataRate this definition:5.0 / 1 vote

1. Malinvestment

   Malinvestment is a concept developed by the Austrian School of economic thought, that refers to investments of firms being badly allocated due to what they assert to be an artificially low cost of credit and an unsustainable increase in money supply, often blamed on a central bank. This concept is central to the Austrian business cycle theory. Austrian economists such as Nobel laureate F. A. Hayek advocate the idea that malinvestment occurs due to the combination of fractional reserve banking and artificially low interest rates misleading relative price signals which eventually necessitate a corrective contraction—a boom followed by a bust. The concept dates back to at least 1867. In 1940, Ludwig von Mises wrote, "The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers' stone to make it last."

How to pronounce Malinvestment?

1. Alex

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   David

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   Mark

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   Daniel

   British

   Libby

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   Mia

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   Karen

   Australian

   Hayley

   Australian

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   Neerja

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How to say Malinvestment in sign language?

Numerology

1. Chaldean Numerology

   The numerical value of Malinvestment in Chaldean Numerology is: 5

2. Pythagorean Numerology

   The numerical value of Malinvestment in Pythagorean Numerology is: 5

References

1. ^ Wiktionary
   https://en.wiktionary.org/wiki/Malinvestment
2. ^ Wikipedia
   https://en.wikipedia.org/wiki/Malinvestment
3. ^ Wikidata
   https://www.wikidata.org/w/index.php?search=Malinvestment